Gold prices today fall slightly from highest level in 9 months

After a smaller-than-expected rise in US consumer prices, the yellow metals had jumped as much as 2.4% on Tuesday, supported by a tumble in US dollar. Elsewhere, silver fell 0.4% to $23.62.

Jateen Trivedi, VP Research Analyst at LKP Securities, said: “Gold prices stayed above ₹54500 and rose strongly in the last 24 hours as lower CPI data gives strong indication for Fed to slow the pace of interest rates if not halt. The statement remains of prime importance as what does the Fed’s first quarter of new year 2023 be like.”

“This will be the last policy of 2022 which can lay the basis for neutral to dovish stance from Fed’s desk. Any surprise hawkishness in the statement shall put dollar rising and commodities shall weaken which is out of expected lines,” he added.

The U.S. central bank is widely expected to increase rates by 50 basis points. Lower rates tend to be beneficial for bullion as it decreases the opportunity cost of holding the non-yielding asset.

Ravindra V.Rao, VP-Head Commodity Research, Kotak Securities: “Inflation in the US slowed to 7.1% in November as compared to a reading of 7.7% in October. The economists had forecasted for a reading of 7.3%. This was the fifth straight month of fall since June 2022 and the lowest since December 2021. Lower than expected inflation print has pressurized the US Dollar on expectation Fed might slow down on the pace of interest rate hikes.”

“Now that the inflation print is out, traders will shift their focus to the two-day FOMC meet that will conclude today. Although the CPI print indicated cooling down of price pressure, Fed is unlikely to alter and will give a 50-bps hike as expected. The focus will be on the Fed chair Jerome Powell’s press conference on signals for the Feb meeting. On the price front although gold rose to as high as $1836.90/oz the close was near the resistance of $1825/oz, double top resistance. Having said that, the bullish momentum might get a push only if the price sustains above the double top on a few closings. If this happens the bulls might further push the price towards $1884/oz,” he said.